Shannon Brown, BDM, Midwinter Financial Services

Embracing digital within your practice technology can boost profits and reduce performance risk for advisers, says Midwinter’s Shannon Brown. Implementing the right digital tech will increase client engagement, boost practice efficiency, and help foster the next generation of advice clients.

The financial advice business is being radically reshaped. More stringent regulations, educational requirements, and the first recession in more than a generation are accelerating the pace of change.

Many advisers and major institutions have left the advice sector, creating an enormous opportunity for those capable of engaging clients and facilitating service at greater scale. Today’s adviser needs to adopt and continually refine smarter means of satisfying the diverse set of challenges they face in an evolving advice landscape.

Embracing digital is no longer optional – it is the foundation of a successful advice business.

More than two-thirds (67.9%) of AdviceTech ‘stars’ generate revenue of at least $2 million, with more than 80% generating an earnings margin of at least 20% over 2018-19 according to Netwealth’s AdviceTech 2020 report.

COVID-19 has only emphasised the difference, with advisers who have adopted digital solutions far better placed to continue providing seamless client service during lockdowns.

Yet despite the benefits of embracing digital, many advisers are still failing to exploit the true power of a digital-first approach.

Greater client engagement

A recent ASIC survey found that 41% of Australians intend to get financial advice although 35% thought the cost was too expensive and 29% thought their financial circumstances were too limited to benefit from advice.

This is a massive untapped market, but the current cost of advice makes many of these potential clients unprofitable to serve. Greater efficiency through digital solutions can rewrite the equation, benefiting both industry and the community.

Administrative and compliance duties can be streamlined using digital tools such as AdviceOS’s Key Risk Indicator Solution (KRIS), which makes it easier for advisers to stay abreast of obligations as well as potential risks. This frees up advisers’ time to concentrate on higher-value activities such as meeting with prospective clients.

To fortify and embrace the human connection behind advice, the Midwinter team have begun to deploy tools that assist in the delivery of real-time, collaborative advice. Digital tools that can speak people’s everyday language rather than industry jargon are a key communication channel in shifting the narrative to ‘clients’ rather than ‘funds’ under management.

For example, the MultiGoal tool allows clients to weigh crucial life event decisions such as buying a home against other personal goals using their language. This type of human-centred design makes it easier to explain the impact and trade-offs of potential financial decisions.

Maintaining inter-generational wealth

Australians over 60 are set to transfer $3.5 trillion in wealth to their adult children over the next two decades according to Griffith University research. Yet only a small minority of financial advisers will continue to provide services to this next generation.

It is a missed opportunity.

Many of these younger investors have grown up in a digital world and expect digital engagement to be standard. While they may not be ready for fully-fledged advice before an inheritance, digital tools are the perfect way to nurture them until that time arrives.

For example, AdviceOS Client Portal allows clients to run various scenarios using financial calculators. Perhaps they are thinking about paying down their mortgage or making extra contributions to their super.

The use of these same calculators in the hands of future inheritors stands as just one potential solution to forming a light touch relationship with their parents’ adviser. The adviser is then well-placed when the prospective client reaches a key life decision, such as buying a first home or having a child, to form a new advice relationship within the same family.

Advisers hoping to be around to help the next generation need to keep investing in technology to avoid being left behind.

Better practice efficiency

Digital tools allow advisers to boost the profitability of their existing client base through greater efficiency, freeing up their own time to provide more valuable services and win new work.

One common example is the fact-finding process. With many advisers still asking their clients to fill in a paper-based fact finds which are manually loaded onto a CRM or advice system by costly support staff.

Midwinter’s AdviceOS allows clients to complete their fact find online where it is stored securely in the cloud. This is faster, more accurate, and creates ongoing efficiencies compared to cumbersome manual processes.

Once a client’s key information has been collected in an online fact find, the power of a digital-first approach can continue to create efficiencies. Other tools within AdviceOS, such as the MultiGoal module, can quickly and efficiently reveal the outcomes of taking financial decisions.

Not taking a digital approach can also have potential regulatory repercussions.

Paper-based records create storage issues – moving office can become a nightmare while lockdowns can make accessing historic records impossible. Digital records stored in the cloud are easily searchable and the single source of truth.

A digital approach can help win new clients, engage current clients, and create a more efficient practice that is better insulated from risk. Now is the time to embrace it.

Shannon Brown is Midwinter’s Business Development Manager. For more information about Midwinter’s AdviceOS, click here or contact Shannon and the team on [email protected].

This article originally appeared in the IFA.

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